2026 tax brackets

[SecondCor521]

Hi all.

It is moderately challenging to find out what the 2026 tax brackets will be.

I'd love to see a source that has the brackets for a single filer if TCJA expires and Congress doesn't otherwise act.

Plenty of sources have the bracket rates. What I'm interested in are the dollar cutoffs for the levels of taxable income levels at which those rates apply. For example, what is the top of the 15% bracket for a single filer in 2026?

I think roughly the brackets go back to the old smaller ones but would be inflation adjusted upwards during the TCJA period.

It's something that would start to become useful for a tax planner like me who tries to look a few years ahead.

Anybody have a reliable cite?

 

[TheWizard]

We also need make sure it eliminates the $10,000 limit on state and local taxes (SALT).
That was the major issue for me...

 

[SecondCor521]

Right now I'm just interested in the factual information.

Discussion of tax policy frequently leads to political debate which will get this thread shut down. If that happens before I find the information, that would be frustrating to me.

Please start your own tax policy debate thread so this one doesn't get shut down.

 

[TheWizard]

Right now I'm just interested in the factual information.
.

Unclear if your comment was directed towards me.
The 2026 reversion to previous tax policy is more than just tax brackets based on AGI.
If you don't quite understand what I'm talking about, then we have a problem.
Nothing political about it, in the simplest form...

 

[SecondCor521]

Unclear if your comment was directed towards me.
The 2026 reversion to previous tax policy is more than just tax brackets based on AGI.
If you don't quite understand what I'm talking about, then we have a problem.
Nothing political about it, in the simplest form...

It was. The "We also need to make sure" phrasing seems to me to indicate a tax policy goal, which is a distinctly different item from my simple query requesting some data.

It may not be political yet, but I've seen enough of these conversations to be concerned it would go that direction. Not necessarily by you, but collectively by board participants.

I'm well aware that there are a great number of changes associated with TCJA sunset. I'd like to limit this thread to just the one aspect I asked about, which is the size of the brackets, as that is the one I'm focused on right now.

(I'm not opining one way or the other on the SALT cap, FWIW.)

 

[MichaelB]

Here are 2 links that might help.

The first is to the Tax Policy Center and states what happens to individual taxes if the tax cuts expire. https://www.taxpolicycenter.org/tax...t=All of the individual tax,(CTC) will be cut.

All of the individual tax provisions of the 2017 Tax Cuts and Jobs Act (TCJA) expire at the end of 2025. Among the changes:

Individual income tax rates will revert to their 2017 levels.
The standard deduction will be cut roughly in half, the personal exemption will return while the child tax credit (CTC) will be cut.
The estate tax exemption will be reduced.
The special 20 percent tax deduction for many pass-through businesses will disappear.
The cap on the state and local income Tax (SALT) deduction will dissolve.

The second is to the Tax Foundation and shows the 2017 tax brackets, which would take effect. https://taxfoundation.org/data/all/federal/2017-tax-brackets/

 

[gauss]

I don't think you will find an answer in that the brackets are based on actual "CPI" figures (actually chained-cpi going forward.) We still have a few years to go until 2026 so it is a bit of a crap-shoot.

That being said, I finally came up with some estimated values based on the original 2017 values and some assumed inflation between then and the 2026 time frame. But, of course, that is not factual.

MichaelB wrote:

The second is to the Tax Foundation and shows the 2017 tax brackets, which would take effect. https://taxfoundation.org/data/all/federal/2017-tax-brackets/

I think the CPI adjustments would apply to the 2017 brackets. One could verify by reading how the actual law is written.

If the brackets are not CPI adjusted from 2017 to 2026, then this is going to be a huge tax increase--but I don't think that is the case.

-gauss

 

[oldtimer]

A 2022 article Preparing for the 2025 Tax Sunset

 

[SecondCor521]

The article @oldtimer linked to appears to have done the math since the 2026 brackets in red look to be inflation adjusted compared to the 2017 rates link @MichaelB posted.

I agree with @gauss that the brackets will be inflation adjusted. I did not want to try to attempt to replicate the CPI (and rounding) math based on a direct read of the law myself.

Thanks all, I have the answer I needed. Feel free to discuss tax policy and politics now if you like.

(ETA: @TheWizard, @oldtimer's article suggests the $10K SALT cap expires 1/1/2026, so good news for you I guess.)

 

[RunningBum]

I hadn't realize, or maybe I forgot, that the actual income values changed (beyond inflation) in some brackets. I think the one that affects me more will be the point at which LTCGs and QDivs are taxed, and it looks like that has been steady with inflation, right? Outside of that goofy $100 or $200 gap with the 3rd tax bracket.

 

[gauss]

A 2022 article Preparing for the 2025 Tax Sunset

Good catch. Thanks. Did anyone see the assumptions for inflation used in the article? I did not.

My estimates were higher than the authors. I think I estimated 2% for 8 years and 7% for one of the years FWIW.

-gauss

 

[SecondCor521]

I hadn't realize, or maybe I forgot, that the actual income values changed (beyond inflation) in some brackets. I think the one that affects me more will be the point at which LTCGs and QDivs are taxed, and it looks like that has been steady with inflation, right? Outside of that goofy $100 or $200 gap with the 3rd tax bracket.

The capital gains brackets also are indexed to inflation, also will revert/change (I think).

I think also the goofy gap problem goes away as part of the reversion, but not 100% sure.

 

[RE2Boys]

A 2022 article Preparing for the 2025 Tax Sunset

Interesting comment in the article about a 3 year fire sale regarding Roth conversions, made me go back and revisit this topic. I had give up doing the conversions as the IRA had grown in the past decade beyond my stomach to accept the tax bill in light of my total tax situation. But due to other factors, I've realized that I'll likely can not avoid the 22% bracket which would be 25% in 2025. Especially once I'm gone. I'm already in RMD territory.

 

[RetMD21]

Keep in mind that in 2026 the estate tax exemption reverts to 5 million adjusted for inflation

 

[USGrant1962]

If that happens I suspect we'll see another retirement surge. Especially among 1099 workers with tax rates up and QBI going away. I want to cut down my consulting hours and it should happen naturally as the big project I signed up for a few years ago is now over the hump. This discussion is crystalizing the end of 2025 as a wind up date for me, so maybe retire for real in 2026.

 

[SecondCor521]

Interesting comment in the article about a 3 year fire sale regarding Roth conversions, made me go back and revisit this topic. I had give up doing the conversions as the IRA had grown in the past decade beyond my stomach to accept the tax bill in light of my total tax situation. But due to other factors, I've realized that I'll likely can not avoid the 22% bracket which would be 25% in 2025. Especially once I'm gone. I'm already in RMD territory.

In my case that's a large part of the reason for this thread.

I'd really like to see what my post-2025 RMD plan looks like to help me plan my 2023 through 2025 Roth conversions. Without FAFSA and IRMAA to worry about, it comes down to federal income taxes plus ACA subsidy losses.

I *think* that I'll end up with a wide AGI range where the marginal rate on the low end vs. the high end is a few percentage points. I'm leaning towards converting more on the premise that the 2026 rates will be higher than what they are now. My RMD conversion plan worksheet assumes current rates.